4096MB (if you have the 4GB Disk Drive space to spare for it), which you hopefully do. A 32-bit app can't use more than 2 GB, whether it is RAM or Virtual. If you have 2GB RAM free already, then the page file won't help and there is something else wrong.

When you run out of available RAM (or get close to that), it'll write to the file, then use the file as if it were extra RAM. The Virtual memory is slower by far than RAM; but your computer will only use as much virtual memory as it needs to.
If you aren't using any Virtual memory, it won't affect the performance of you machine one way or another. If you start using more memory than you have avail. RAM, then your computer will start to use the virtual memory. The more virtual memory you have to use, the slower your machine will perform.
When you close the program that is using the page file (D|S presumably), then your computer won't need the virtual memory anymore, will stop using it, and go back to normal.

Friends don't let friends use booleans.